1.

I Buy A Piece Of Equipment, Walk Me Through The Impact On The 3 Financial Statements.

Answer»

Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash OUTFLOW (cash flow statement).
Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while RETAINED EARNINGS go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement).

Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash outflow (cash flow statement).
Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while retained earnings go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement).


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